Lenders obtain 55% share in GMR Rajahmundry Energy

GREL lenders have acquired 55% stake in the company under the Strategic Debt Restructuring Plan.

The Dollar Business Bureau

The GMR Rajahmundry Energy Ltd (GREL), subsidiary of GMR Infrastructure Ltd, said that lenders have acquired 55 percent share in the GREL after debt restructuring.

"GREL’s group of lenders has adopted the Strategic Debt Restructuring Plan (SDR), as given under the scheme allowed by the Reserve Bank of India (RBI)," the company said in a statement.

"In accordance with the Plan, GREL has issued equity shares in proportion to all the lenders, in its meeting held on Monday.

As per the SDR Plan, out of entire debt of Rs.3,780 crore, an outstanding amount of Rs.1,414 crore has been transformed into equity by which the consortium of lenders got 55 percent holdings and the remaining share of 45 percent remained with the GMR, the statement said.

"After the conversion, the debt balance of about Rs.2,366 crore would be repaid within a period of 20 years, at 10.75 percent interest rate. The overall equity in the project, after SDR, would be Rs.2,571 crore that makes a debt-to-equity ratio of 0.9," it said.

The company said that the reduced debt levels along with decrease in interest rate would help in enhancing the long-term feasibility of the project.

GMR’s Rajahmundry Power Project is a gas-based combined cycle power project, with 768 MW capacity, located in the Rajahmundry district of Andhra Pradesh.

Although the project was finished in 2012, the commissioning has been delayed due to non-availability of natural gas. The project was operational from July 2015.

A Strategic Debt Restructuring Plan allows banks to convert loan or debt at a price less than the prevailing value in the market and they can take at least 51 percent or more shares of a company.

The Dollar Business Bureau - May 14, 2016 12:00 IST